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Indian Onion Shortage Causes High Prices and Political Peril

30.10.2005

Anjana Pasricha

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Indian Onion Shortage Causes High Prices and Political Peril

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A shortage of onions and a subsequent huge increase in the price of the essential cooking ingredient has forced India to import hundreds of tons of onions from Pakistan and China. onions are not only a key ingredient in Indian food, they are also a sensitive political issue in the country.

After angry consumers denounced the soaring price of onions recently, the Indian government moved quickly. It placed orders for two-thousand tons from China, and another 650 tons from Pakistan.

In recent weeks, onions have been selling in India for more than half-a-dollar per kilogram, nearly three times the price of a year ago.

The government says heavy rains that flooded a major onion-producing region in Maharashtra state in July damaged the crop, and led to the surge in prices. They are also blaming traders for holding back stocks to keep prices high.

Officials hope the imports will alleviate the shortage and dampen prices ahead of the country's main festival, Diwali, which falls on Tuesday. Alok Ranjan, head of the National Agricultural Cooperative Marketing Federation, says authorities are also rushing supplies from other parts of the country into cities like Delhi and Bombay, where prices are the highest.

"We are getting onions from Rajasthan, we are importing…so as a result, the market prices have already shown a downward trend."

Onions add a tang to Indian food, as they do to cuisines all over the world. They are the basic ingredient used to make the popular Indian curry dishes.

But it is not just onions' popularity that makes their price a sensitive issue in India.

Although India's steadily growing economy has created a booming middle class in recent years, one-third of the country's billion-plus people still lives on less than one-dollar a day.

Onions are regarded as the most affordable vegetable for millions of these poor people, and onion prices can affect political fortunes.

In 1998, the Hindu nationalist Bharatiya Janata Party was thrown out in provincial elections in Delhi, largely because of runaway onions prices there. Ever since, governments have been quick to respond to any "onion crisis."

Meanwhile, economists are warning that overall food prices are also on the rise. Inflation has been running at nearly five percent in recent months, and India's central bank has expressed fears that inflation may increase further in the coming months, partly due to the huge increase in the price of imported crude oil.